Q1 2021 OptiNose Inc Earnings Call

May 5, 2021

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Ladies and gentlemen, todays conference this year to begin shortly until such times of really anywhere remain on music hold discounting of the standby and we thank you for your patience.

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Okay.

Yeah.

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Good day, and thank you for standing by while the comfort of Okeanos quite of 1071 earnings call.

At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

I asked the question during the session you will need the breadth of star one on your telephone.

Got advice that the East conference is being recorded if you require any further assistance. Please press. The star is everyone I would now like to hand, the conference over the our speaker of today Jonathan Nally.

The president.

The relationship of please go ahead.

Good morning, and thank you for joining us today as we review of the notice of this first quarter 2021 performance on our plans for the remainder of the year I'm joined today by our CEO, Peter Miller, our President and Chief Operating Officer, Rami, Mark Hood, our Chief commercial officer.

Critical valley at our CFO Keith got in the slides that we presented on this call will be viewed on or it can be viewed on our website at <unk> dot com in the investors section before we start I would like to remind you that our discussions during this conference call will include forward looking statements. All statements that are not historical facts are hereby identified as forward looking statements.

Forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated by such statements. Additional information regarding these factors and forward looking statements as discussed under cautionary note on forward looking statements section of the earnings release that we issued today as well as under the risk factors section and elsewhere of Optum knows his most recent form 10-K on form 10-Q that are filed with the SEC.

SEC and available on their website at SEC Gov and on our website at off the nose Dot Com <unk>.

You are cautioned not to place undue reliance on forward looking statements forward looking statements. During this conference call speak only as of the original date of this call or any earlier date indicated in such statement and we undertake no obligation to update or revise any of these statements.

We'll now make prepared remarks, and then we will move to a question and answer session with that I will now turn the call over to Peter Miller Peter.

Thanks, Jonathan and good morning, everybody.

We appreciate you joining us this morning.

Starting on slide three.

Well go into more detail on a moment, but I'd like to highlight four key takeaways from today's presentation first of Q1 2021 financial performance was aligned with our company guidance. This is an important year for our company and getting off to a good start enables continued strong focus on our two core objectives driving enhanced revenue and.

Completing the the chronic sinusitis pivotal trials, which we believe could create significant additional value for the company.

Second new.

On the prescriptions of <unk> achieved another all time high in the first quarter, despite continuation of pandemic related market challenges with new prescriptions, increasing 16% over first quarter 2020.

Notably this growth as against the quarter, a year ago, which was not significantly impacted by the pandemic and in an environment when market, new prescriptions decreased 30% versus the prior year.

Third we believe there are multiple opportunities that will continue to support revenue growth in 2021.

The market environment is one factor I will discuss now and we will discuss additional factors on the next slide.

The pandemic both reduced the number of diagnostic visits by patients to physician offices and limited the ability of sales representatives to meet in person with physicians.

These market conditions have improved somewhat since the depth of of the pandemic, but are still lagging pre pandemic norms.

Looking forward as the pandemic environment eases, we expect both of our territory manager access to health care offices and patient volumes into those offices to improve throughout 2021.

We expect these two factors will provide strong support for continued growth on ex hands prescriptions in 2021 in.

In addition, we believe there is opportunities to get more benefit from our partnership with Carlyle as the pandemic environment improves access for their representatives as well.

Fourth we expect to complete enrollment in our first pivotal clinical trial evaluating <unk> for the treatment of patients with chronic sinusitis in third quarter 2021 with corresponding top line results in first quarter 2022.

This is a change to prior guidance of top line results by the end of 2021 and as a result of pandemic related issues, including temporary research site closures and decreased patient flows in locations outside the United States that have continued beyond the first months of this year.

We are very enthusiastic about the opportunities for growth the successful chronic sinusitis trials would create.

<unk> could be the first drug ever approved and promoted for treatment of the 30 million U S patients who suffer from chronic sinusitis we.

We believe this data could increase product differentiate product differentiation create a multi fold expansion of the target patient population basis for new partnerships improve ex U S opportunities and drive significant additional value for the company.

Turning to slide four.

As I just mentioned, we believe our expectations for growth in 2021 is supported by multiple factors. In addition to and perhaps more important for long term prospects and improving market conditions. We believe there is an increasing recognition by thought leaders in the specialty societies that <unk> plays a distinct and important role in <unk>.

Treatment of patients with chronic rhinosinusitis with nasal polyps we.

We believe they stepped care paradigm is emerging for treatment of this disease much as we've seen in other disease areas, where there are multiple different types of therapeutic options, such as asthma hypertension and pain.

Importantly, based on activity from relevant specialty societies, such as the American Rhinology Society, and American College of allergy asthma and immunology. It appears on its hands is increasingly perceived by experts as offering an option distinct from standard of nasal sprays surgery or biologics, we believe that of <unk>.

Framework customized the individual patient needs, but based on the stepwise logic of escalating patient care as needed from over the counter nasal sprays to X hands to surgery to enhance again after surgery and finally to biologics will support broad adoption of <unk> as the standard of appropriate.

The management of the disease.

This paradigm of supported in multiple ways that we have already begun to discuss with physicians today, one of which is of published analysis of our pivotal trial data from Dr. Brent Senior Chief of Rhinology at the University of North Carolina Chapel Hill on others reporting the benefits of VIX, hence for patients who previously tried standard nasal steroid sprays.

We think that this kind of expert, especially recognition of the distinct role of VIX hands as an important validation of the value of the product, reflecting growing appreciation for its importance and supporting broader adoption by clarifying the role of the can play in the treatment armamentarium.

Turning to slide six we.

We had strong performance in first quarter 2021, and I will briefly touch on the year over year of growth highlights on this slide and the next.

In the first quarter of 2021 two of the were approximately 25900, new prescriptions for <unk>, hence the 16% increase compared to first quarter 2020, and the highest number of new quarterly prescriptions for <unk> since launch as.

As mentioned this volume growth was achieved against the market that declined 30% over the same period.

The total number of <unk> prescriptions in the first quarter of 2021 was approximately 72600 <unk>. This represents 30% growth over the first quarter of 2020 and of market environment, which declined 23% over the same period.

Turning to slide seven.

The <unk> market share increased from three 4% in first quarter of 2020 to five 4% in first quarter of 2021.

We're encouraged by this growth, but also excited about the headroom for future growth as more physicians incorporate X hands as a part of their customary practice.

While the <unk>, 5% of the intranasal steroid spray prescriptions written by the 18000 physicians on our target audience. There is a growing segment of believer physicians for whom it enhance exceeds 20% of ians prescriptions written the.

The share penetration achieved in this group continues to signal the potential for growing of substantial business in the E&P analogy audience based on the current nasal polyp indication alone.

Breadth and depth of physician prescribing as measured by the total number of physicians who of patients filling <unk> prescriptions increased from first quarter 2020 to first quarter 2021 as well.

Regarding breadth and first quarter 2021, approximately 6920 physicians had a patient fill at least one prescription of the chance and increase of 9% compared to first quarter 2020.

Regarding depth the number of physicians, who had more than 15 <unk> prescriptions filled by the patients in the quarter has grown even faster with that number of increasing by 44% from first quarter of 2020 to first quarter 2021, with nearly 3500 physicians now in this segment.

During the last year increased depth drove more of our growth and increased breadth.

As business conditions improve we believe the opportunity for growth in both depth and breadth of will return and we are focused promotional efforts against this objective.

In a few moments I'll provide some closing remarks, but I will first turn the call over to our CFO Keith <unk> for comments regarding first quarter 2021 results and perspectives regarding our corporate guidance Keith.

Thank you Peter.

Pardon me and thanks to everybody for joining us this morning.

As we reported <unk> recognized $12 million of total revenue in the first quarter of 2021.

Consisting of $11 million of expense net revenue and $1 million of licensing revenue from of onetime milestone payment we received under our license agreement with <unk> Pharmaceuticals.

As noted on prior calls one of the metrics that we track is expense average net revenue per prescription, which is calculated by dividing net revenue for the quarter by the estimated number of <unk> prescriptions dispensed during the quarter.

We continue to believe this is a useful metric to evaluate the net revenues generated per prescription. However, we remind you that this metric is subject to variability that does not necessarily reflect the change in the price that is paid for an individual unit of <unk>.

Based on available prescription data purchased from third parties and also on data we received directly from our preferred pharmacy network enhance average net revenue per prescription for the first quarter of 2021 was $151.

This was favorable to our guidance of 120 to $140 per the first quarter and an increase compared to $126 in the first quarter of last year.

Moving to slide 10.

Our first quarter 2021 financial performance was in line with our prior expectations and as a result, our guidance for the full year and the remainder of 2021 is unchanged.

First we expect expense net revenue to exceed $80 million for the full year 2021.

Second with respect to expense on the net revenue per prescription we expect to see substantial improvement over the remaining three quarters of 2021.

As well as an increase in full year 2021 compared to the full year 2020 result of $185.

As discussed on our last earnings call. We had of pandemic response patient assistance program in 2020 that we do not expect to repeat in 2021, which we expect to contribute to this increase.

Finally for the full year of 2021, we continue to expect total operating expenses to be in the range from $137 million to $142 million of which approximately $10 million of stock based compensation.

Total operating expenses, excluding stock based compensation are therefore expected to be in the range from $127 million to $132 million.

I will now turn the call over to Rami to discuss our development programs.

Thank you Keith turning to slide 12.

Regarding our pivotal CF trial today, we announced that we recently completed an interim analysis to assess the variance of one of the two co primary endpoints in our first trial of 32 O five.

All of this was intended to assess whether the variance assumption in our off priority of sample size calculations were consistent with the actual variance observed in the trial.

All of US was performed on blinded interim data on approximately half the number of patients that we project to enroll ultimately and $32 five and to assess the variance in the primary symptom endpoint.

The results of this interim analysis was of the observed variance was lower than the Varian was assumed when the estimated sample size and power during the design of the study.

As a result of determined not to make any alteration in the sample size of that trial on the basis of this interim analysis.

In the coming few months, we may elect to conduct a separate interim analysis of the other co primary endpoint, which is change in average of percentage of pacified volume RCT scan endpoint, which.

Which is change from baseline to week 24.

The COVID-19 pandemic environment, particularly at European and Canadian trial centers has continued to influence the rate of enrollment beyond the first months of this year and that has created difficult to predict patient recruitment rate.

We've continued to enroll patients throughout this period and we are encouraged by recent improvements in enrollment rates add effect of centers. However, we now expect to complete enrollment in the first pivotal <unk> trial in the third quarter with top line results. Therefore in the first quarter of 2022.

We continue to expect results from the second ongoing trial in the first half of 2022.

Moving to slide 13.

Regarding <unk> 109 of our product candidate with potential utility for treatment or prevention of COVID-19, and for helping prepare for future Pandemics.

On in March we announced our plan to conduct the phase one study to evaluate the ability of <unk> of 109 to reduce the viral burden.

In the nose with initial results available within a few weeks of the start of the trial enrollment.

<unk> approval to initiate the study is still pending.

We continue to expect result provided we get that approval within the second quarter of 2021.

As previously noted despite the excitement that we and others have for the potential value of opined on 109, we are aware of the need to maintain a sharp organizational focus on growing exam and on completing of Rcs trials.

Therefore, we are actively seeking grants partnerships <unk> other sources of capital to support further development of this product without detracting from that primary focus.

I would now like to turn the call back over to Peter for closing remarks Peter.

Thanks Rami.

Turning to slide 15.

Before moving to Q&A I'll take a moment to reiterate that we are optimistic the 2021 has the potential to bring a substantial improvement in the business environment and that this improvement buoyed by multiple other factors specific to our business and plans will continue to support strong future growth for <unk>.

We are laser focused right now on two clear objectives.

Revenue growth for <unk> and completion of our pivotal trials in chronic sinusitis.

I look forward to providing updates on our progress throughout 2021.

And now I'd like to open the call up for Q&A.

Thank you Sir as a reminder to ask the question given the need to press star one again on the phone.

As long as part of one of the day. Your question. Please press of Badger.

Okay.

Our first question comes from the line of David Epsilon from Piper Sandler Your line is open.

David We can't hear you if you happen to be on mute.

Yeah.

Okay.

Operator.

Absolutely on your line is open.

Let's go to the next question operator.

And our next question comes from the line of Gary <unk>.

Mcmahon from BMO capital markets. Your line is open.

Hi, guys good morning.

I apologize if you cover the something of a kind of a different call.

Have you made any changes to the patient assistance program is that something you would consider modifying into the allergy season that it may be just comment.

How much of the cash uses allergy versus chronic sinusitis and pollo of aggressive non polyp patients.

Give us an update there.

And then just one other one.

Any modifications to the specialty pharmacy network.

Will that continue to grow and could that potentially put pressure on the net revenue per Rx I know thats one of the factors that goes into it.

Maybe I'll start and the you.

You can add a few comments and Keith possibly as well on.

Gary we did make changes to our patient assistance program at the start of the year and it frankly was less about the allergy season and more about an opportunity. We thought we had to improve average net revenue per prescription by for uncovered patients moving the first prescription so commercially <unk>.

Bowl, but not covered by an insurance plan by their insurance plan moving the payment from zero, which it was previously to $25 and that has two important those by the way are not profitable prescriptions for us and the reason we've done that is so that we can go to physicians and say we have a robust.

Program, ensuring that the majority of patients are of who is going to get the product at a very affordable price we.

We did a lot of work with physicians and found that moving to $25 was acceptable and we have not seen the significant impact on physician prescribing, but it does two things number one is we get $25 that we collect on those first scripts. The second is some patients don't sell at the $25 and that's actually a good thing for us because those are not profitable prescriptions on.

That change has the possibility of that Keith referenced of contributing to improvement in on.

Our average net revenue per prescription versus prior years.

Specific to your question on allergy soon so we haven't done anything Gary specifically in patient assistance to try to capture allergy volume I don't know if that was sort of behind your question.

But relative to.

Where our businesses. If you will it's reasonably unchanged from what we've talked about historically that about a third of the businesses with nasal polyp patients.

Baton other third roughly with CF patients without polyps and then the balance with other conditions, where people have chronic inflammation of the nose.

Before we go to the specialty pharmacy question did you have anything to add.

No I think that's a nice summary, Peter maybe the only thing I'll say is that the the key part of the allergy business as the when and drive patients into the office, that's a key opportunity for chronic sinusitis and ultimately nasal polyps to be diagnosed so we do see that growth.

Just to amplify the Gary I think you know that the.

The CF patients get exacerbations that are sort of caused by seasonal allergies and that some.

That obviously creates patient flow with potential new patients that are appropriate for <unk> relative to the specialty pharmacy network.

Feel really good about the network. We built we have a couple of national providers, we have some regional providers.

That contributes to the four prescriptions per patient per year that we've been able to generate.

We think it's going to be part of our business for now Gary in the specialty segment.

We don't think it's necessarily going to put any significant additional pressure on the net revenue per prescription if anything it was Keith guided certainly this year, we expect improving average net revenue per prescription per year and as we look out.

If anything we see it reasonably.

Consistent with where we are relative to future trends, if anything may be having some favorable tailwind.

In that area.

That's great. Okay. Thanks, a lot.

And our next question comes from the line of the Georgia Giordano from Cowen <unk> Company. Your line is open.

Hey, guys. Thank you so much for taking my questions. Congratulations on all the progress.

So I guess maybe first.

Hoping you could talk about those high prescribing physicians.

What differentiates them from the rest of your prescribers or do they just have the highest volume practices is there anything different about what for example, the specialty.

And for those specific.

Above 15.

What is the share of eggs.

Script out of their total IMS scripts.

And then the ask this on.

I'll start George and I'll pass it to Vic maybe for a little bit of commentary.

Part of the reason I just continue to be very optimistic about this business is because what is happening in that believers segment and we obviously do work to understand why people are writing and why people are not writing more I should say.

In that believer segment when you ask those doctors why are you writing they say two things number one is they say I believe in the product efficacy that it is materially different than the efficacy certainly of an intranasal spray and they think it brings significant value for patients and they've seen it in their own patients.

The second thing is they say I find it easy to write and very affordable for patients.

And in fact, we do have very good market access coverage commercial coverage approaching 80% and if anything we think it has potential to improve from that point.

Over the next six to 12 months on.

But the second thing is he they know that it's affordable and I think we've said this previously but 80% of the patients nationally receive an enhanced prescription with no out of pocket cost and these physicians know that so we have good we have good efficacy. We know that we have good access we have good affordability our challenge.

In the challenge, but our opportunity is a great opportunity to grow. This business is get that next group of what we call dabbler to understand that the product really does work exceptionally well in certain patients and it also is it.

It has it's affordable and it is accessible.

So vik I don't know if you want to add anything.

Attitudinal.

Early adopters of these believers are in fact, just that the classic early adopter of group, but when we see an opportunity to leverage them.

To begin to influence other peers in the community that frankly, just aren't as quick in adopting new technologies I will say, Georgia two that they are everywhere. They are.

Not specific to a certain geography, then on specific to a certain prescriber type. They are in E&P, either an allergy some of them or even in primary care and literally they are all over the United States, which again gives us confidence.

Of the ability to grow the business the share by the way as we said to get into this group you have to have greater than the 20% share.

Some of these doctors by the way of a very high shares good bit higher than 20%.

Got it no. This is actually incredibly helpful. Thank you and then.

Not sure if you're willing to comment on this.

But given the improved profitability in the recovery of the pickup in prescriptions per screen.

Do you believe the current cash on hand.

It would be sufficient to get you the profitability to breakeven.

Keith I'll, let you take that.

As we stated in the in the Q the only guidance that we've given on cash is debt.

The the.

Cash on hand.

Is sufficient to get US 12 months out.

We ended the year with $144 million into the quarter of 116, So we feel pretty good about the cash cash position.

<unk> has always been traditionally if you look back over 19 of 'twenty, our highest cash burn quarter. So as we continue to grow expanse.

Throughout the quarter, we are of very high margin product in the mid <unk> in terms of gross profit contribution so that.

At the <unk>.

Gross profit contribution will continue to offset the the.

The cash burn.

So we're excited just to focus as Peter made in his remarks on the growth of expense this year and the completion of our <unk> trials.

Thank you so much.

And our next question comes from the line of David Steinberg from Jefferies. Your line is open.

Hey, guys, it's actually Ed Chan on for Dave a couple of questions here.

Let's say you had talked about.

Potential.

Sure.

The year.

The ability to get into physician offices to make office calls.

Can you update us on on where that is with you and also with the <unk>, who I believe you said was having.

It was not making as many of those calls.

When the timing might come before they can.

Actually get into the office of feed of the doctors.

Again, I think maybe I'll start and you can chime in with call of commentary. Thanks for the question Ed.

Joining us this morning.

Obviously predicting access is going to be hard so what we're relying on here are surveys that are being done by <unk> and our own reps in terms of trying to understand what the future environment could look like relative to access.

This is an estimate ed, but we still are not in a lot of offices. Currently so again what gives us real.

Encouragement about our businesses were growing the business really pretty significantly against significant challenges of both patient volume and market new prescription volume in <unk> volume.

<unk> volume being down substantially and access to office is being challenged.

And right now in many parts of the country, we are unable to access.

The 40% to 50% of doctors in any territory. So.

Our view of why is that going to change.

There's been some survey work done by <unk>, and it's very encouraging in some ways in our categories that in the fourth quarter on the substantial number of physicians did not want to have face.

Face to face interactions with the art with with our sale of any sales representatives that has improved substantially in the latest survey work that was done in March.

We're prepared for certain physicians still non allowing access but I think in <unk> of this year. We expect to see continued improvement I was with the physician group. The other night and take this as an N of one in one market that has two big groups by the way roughly 100 doctors across the two groups not allowing access said that in June.

Their expectation is to open up access to territory managers.

Different from anything to add there we talk about <unk>, yes, I would say that the physicians basically are telling us they see the availability of vaccines and the.

Of the spreading of the vaccines as of.

As an opportunity for them to normalize the flow of pharmaceutical companies back into their offices somewhat.

We also continue to invest in non personal promotion.

<unk>, so that we find and continuing to strengthen our capabilities to reach them on other channels as well so our confidence there is growing.

On <unk> and Vicki can jump in here, but it was actually done and done a nice job across.

In the current environment is probably on the last call. We were talking about for Q, but <unk> was out like many of the pharmaceutical companies Coca Cola Bottler was very typical of the majority of the pharmaceutical companies in terms of.

Getting back out active in face to face detailing and Theyre now reasonably I think in line Vic is fair to say with the industry and they're now back out making substantial number of face to face calls.

<unk>.

Through the.

Ending of the first quarter into the second quarter, we really have not yet seen significant impact yet.

But again, we remain hopeful as they as access improves and they're able to get out the more physicians that they can bring real benefit.

And again to kind of anything to add when we've had great collaboration between their team on our team we do see impact from the physicians are able to make those calls.

Where the confidence.

Thanks for that.

And also just on on.

On the average selling prices again.

Obviously.

If you look at last year on the the Asp's or were dampened by the.

The extension of zero co pay.

The pandemic going on.

So and the rest of this year should the pattern of look.

Perhaps a little more like what we saw in 2019.

On a sequential basis.

We think thats right Ed sorry.

I was kind of stay the same thing we expect.

The guidance, we have out there is that we expect for the full year to be north of where we ended up last year. The 185.

As you noted that was impacted negatively.

Firstly by the assist program that we ran which was of pandemic response program.

That we put out there for patients to bridge them until they could get surgery.

With that program not being repeated this year, we would expect the cadence to be similar to 19 as you said.

And we're.

We are optimistic for the average net revenue per script prospects for this year.

Thanks, Thanks, so much I appreciate the color.

And our next question comes from the line of of Brandon Folkes from Cantor Fitzgerald. Your line is open.

Hi, Thanks for taking my question.

So maybe just on the guidance can you help us think about.

Between Inc.

Keeping that guidance, how much is going to be driven by script growth versus sort of the net price.

Script.

And then staying on net price per script.

Can you just help us.

Texture lies maybe the inventory that was on the channel at the.

The end of <unk> versus year end and with the has had any impact on the net price per script during the quarter and then secondly, maybe just a clarification on the earlier question.

Your cash runway extends 12 months out does that get you through.

I'll read out thank you.

All of you start I can channel. So I can tell you Brendan with respect to our average net revenue per script.

I said on my comments, it's the numerator in that equation is the net revenue for the period, which was driven by our gross sales.

The ex factory sales adjusted for what we expect to realize the hole.

The whole gross to net.

Sausage, making.

So.

Absolutely if we see of Destocking in the channel, which we saw on Q1, which we always expect to see in Q1.

It does.

Adversely affect our average net revenue per prescription because you have of lower numerator.

The as the channel Equalizes just to go back the reason that we see.

And we would expect to continue to see Destocking in the first quarter of every year is because there is a buy in both from the wholesalers the traditional big three as well as our PPE and ahead of the unexpected price increase which typically comes in the beginning of the year. So we typically the cadence and I don't think this is.

Unique to.

To up the nose, but by any stretch, but we typically see stocking occur in December and then of destocking occur over the over the first quarter.

Net negatively impacts first quarter results, but it's on a full year basis, it's 12 months and 12 months out.

Because we see the destocking in the January or in Q1 stocking in the fourth quarter. So equalizes on on a full year basis, so the definitely adversely impacts.

The.

Average net revenue per script in that first quarter and it's one of the one of the factors that leads us to guiding the average net revenue per prescription.

Will be lower in the fourth quarter than it typically is in the I'm sorry of the first quarter and typically it's in the fourth quarter.

With respect to growth.

Ill start and ill turn it over to Peter.

But the the growth that we see this year is.

We expect to see issue I would say is primarily driven by prescription by by unit growth.

While we do expect to see growth in the average net revenue per prescription.

We certainly expect to see the the period over period year over year growth in.

And units meeting in <unk> for the full year.

Yes, I mean, I just would add.

Things that we've sort of talked about previously Brandon is that we think the average net revenue per prescription is going to be more like 19 than it was in 'twenty. So we were 185 last year were closer to 200 in.

Yes.

The 185 last year, and then about 200 the year prior so the women on <unk>.

You can do the math, obviously of the potential benefit on price and the balance we do think is prescription growth.

We feel really good about growth prospects. We had we had good growth against the first quarter of last year, which was the non pandemic year.

We actually even grew new prescriptions.

Year over year on Youll recall, what happened to us in <unk> and <unk>, we had a significant impact on our new prescriptions in <unk> because of no patient volume in physician offices. So when you think about a year over year impact for the balance of the year, we're going to be up against.

A very soft base from a pandemic standpoint.

And as a reminder.

70% in 'twenty versus <unk> 19 fully in the pandemic year majority of the pandemic year against the base that was unaffected by the pandemic. So we feel very good about growth prospects.

And that supports our $80 million revenue for.

And Brennan with respect to your question around cash the.

The guidance, we put in the <unk>.

Q isn't so much guidance, it's basically compliance with going concern.

Bases that the auditors need to provide of clean review, which they did this period. So that's the 12 months is the minimum rate. We said the same thing last period.

At the at our March call. When we report our year end results, we reported that the company had cash to meet its ongoing obligations.

<unk> with respect of debt and R&D for at least 12 months. We said the same thing this period.

<unk>.

So I would rely less on guidance than anything else. We have said that we expect I believe we said we expect the completion of.

The reporting of data for the second trial in the first half of next year.

So hopefully that answers your question.

And your next question comes from the line of Danielle <unk> from RBC capital market share and Hilton.

Yes.

Good morning, everyone. My first question is on the chronic sinusitis trial. It was only a couple of months ago that you guided to of top line readout for the first trial by the end of 2021 now that data is expected in the first quarter of 2022.

What's your overall level of confidence that youll be able to deliver data within the new timelines and also was there any particular impetus to conduct the interim analysis.

Second as we look out over the rest of the year do you expect normal seasonality to come back and play a role at all on demand for its hands.

Well I mean I'll, let you take the first couple of.

Sure. So the primary reason for moving a few weeks out on the.

The expected completion of enrollment.

It has been the impact of the pandemic and as we noted earlier it is primarily the impact in European and Canadian sites, There's a number of countries in Europe, which I'm sure you're aware.

Were particularly impacted during the.

The sort of month.

During the earlier part of this year debt.

In ways that we Couldnt really have predicted even just a couple of months ago. The either had a prolonged effect, where the delayed vaccine uptake or other factors locally that affected the ability of trial sites to.

The entire patients to come in or even to be permitted to have patients coming in and that was different for different countries and it turned out that some of the centers and some of the countries, where we were particularly.

<unk> had previously seen excellent enrollment were especially impacted so that has slowed things down a little bit but as I noted earlier in my comments, we have continued to enroll throughout this time.

And we just have pretty.

Pretty high confidence based on the track record so far and the number of patients that remain to be enrolled that we'll be able to complete in the window that we're currently projecting.

Interim analysis Rami, yes, the interim analysis I don't know if you recall this daniel but the the interim analysis was preplanned. So it's not something that we.

Engaged in because of some some new finding or new events that occurred in the trial. So it was the planned analysis.

To evaluate variance.

In part that's because of the assumptions, we had to make for variance.

Were based on limited prior data. So this just reinforces our comfort level that we've made the right the right assumptions about the.

The sample size that needed to be in the trial.

<unk>.

This shouldn't be interpreted as something thats a reaction to some events occurring during the conduct of the trial.

And Dan regarding the seasonality.

I think we said this on the last call but.

Relative to our ability.

As it relates to our guidance of $80 million of revenue from a market environment standpoint, we did expect there to be an impact on the <unk> allergy season pandemic related we did not expect normalization. If you will in <unk> on either patient volume.

The access to physicians.

We do think in the back half of the year debt. We expect reasonable normalization is what we are currently thinking and Thats, obviously somewhat of a crystal ball, but.

Looking at the current trends in the market environment.

And vaccination rates on all the rest.

We think that we'll get back to reasonably of normalized market in the back half of the year.

Great. That's helpful color, if I could ask one quick follow up could you just provide your latest thinking around business development and is that something you'll want to have chronic sinusitis data in hand for before pursuing in earnest.

I will say, Dan we are we're not going away from the data to begin conversations with potential partners. We think the potential value of a primary care deployment with the <unk>.

This indication is substantial and we've done significant work on primary care physicians and.

Arguably <unk> a wonderful addition of their armamentarium with the chronic sinusitis patient right now the primary care physician.

Pretty much after a patient sales an intranasal spray, which is what they put every patient on and in fact from chronic sinusitis, 80% of patients do not get relief in what part of it.

Your line Situs do not get relief from the IMS the only real option. Those primary care docs have today is to refer to an allergist on A&P and.

With this expert consensus that the emerging the experts and emt and allergy of recommending or suggesting that before going to surgery or before going to biologics that expense be considered in the paradigm, that's something that really fits directly into a primary care physician in terms of what they're doing.

So as a result, we have very.

We're very excited about the opportunity in primary care Forex hands, and we think the right way to do it is the of partnering.

As a result of that we are we're not going to wait for data to have discussions with folks.

The begin to educate them on the opportunity.

Great. Thanks again.

Thanks, Dan.

Okay.

Your next question comes from the line of the.

Even the Epsilon from Piper Sandler Your line is open.

Hey, thanks.

So maybe I'll ask of variation of the business development question.

Slash topic.

I guess the.

Question here a couple of questions one is.

How big of a priority is that for you to add on that.

The other assets.

Or you could leverage your E&P slash allergists.

Sales presence.

So that's number one and then number two is you do have some general practitioner presence I know you talked about the partner.

Around the <unk>.

Yes indication, but do you think about also.

Product, where there is an adjacency into into primary care.

And then lastly, just on.

On.

Lifecycle management for <unk>.

How should we think about line extensions per product for instance, in the AAP combining the corticosteroid with.

An antihistamine.

And as the last day of times I mean is that something that you would contemplate down the road just wanted to get your latest thought process there. Thanks.

Well I'll start and Rami and the can others can jump in but relative to prioritization of getting another asset in to leverage our E&P and allergy presence.

It's not an immediate priority David I mean, right now I think we're crystal clear that our priorities are on growing the <unk> business and.

And also getting completing Rcs trials. So it's not an immediate priority, but I have said historically and I still feel this way debt.

We have to at a point in time getting get greater leverage than we have as a company that it just doesn't really make sense, even if you of a sizable <unk> business and the anti allergy segment to not find ways to get greater leverage on the across both the headquarters of infrastructure that we built but especially the call point of infrastructure because great.

Very proud of our sales team, what they've accomplished and the relationships that we've developed so it's not of near term priority, but it is something that we absolutely believe and certainly in the next.

12 months.

Becomes a much higher priority.

Relative to your question on primary care I want I know you know this David but I want to remind you that the real opportunity in primary care is to get access to the 7 million patients being treated by roughly 50000 primary care providers.

And as a reminder, that's more than double the number of patients that are being treated in E&P allergy. So the opportunity is very substantial and in that market as I described a minute ago. There arent good choices and there's really not there's really no competition for.

These quantify on a sinusitis patients from a co.

Promoting if you will so it really is a substantial opportunity and we think the right way to maximize that is true partnering or are we in primary care. Some officers today, yes. We are we continue.

To expand in some primary care offices, we will.

But we think from an efficiency standpoint, the right thing to do is to find one of the folks that are in primary care and there still are several with.

With significant presence there.

There is great Cross match, we know that already with the physician with companies that are already in the space relative to patients who have chronic rhinosinusitis. So we think the right way to maximize the business through partners in primary care, having although having said that we will look to expand.

In some in some smaller instances, if you will and some adjacencies relative to lifecycle.

Rami, maybe I'll, let you talk about opportunities within the exploration delivery system device, but our focus there David is largely on looking at things that we can in license for the most part, but I'll, let rami sort of described.

<unk> your thoughts on lifecycle within exploration delivery, yes. Thanks for the question. David So you mentioned in the last day and other things that just backing up a little bit the when the time is right and as Peter said, our focus right now is on growing expense revenue and the completing the chronic sinusitis trial. When the time is right the kind of product will be looking for.

Sure.

Of these which are meaningfully differentiated.

And useful to changing standard of care in the physician audience that we're currently calling on and we're going to be open minded about what kind of product that is so it could conceivably be of product and installation delivery system or other day delivery or it could be of product that has nothing to do with nasal delivery of our treatment of diseases of the nose, but which is still relevant to the physician audience for calling on but it is going.

The need to be something which is.

Net of clinically very meaningful.

It brings real benefit to patients from the health care system.

Okay, I think thats it.

In terms of questions operator so.

If there aren't any further questions, we'll conclude the call I'd like to thank everybody for joining us. This morning, and we look forward to continued updates throughout the year.

Thank you Sir.

Ladies and gentlemen.

This concludes today's conference call. Thank you all for participating you may now disconnect.

Okay.

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Yes.

Okay.

Sure.

Thanks.

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Okay.

[music].

Good day, and thank you for standing by while the comfort of Okeanos quite of one 2021 earnings call.

At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

The question during the session you will need the breadth of star one on your telephone please.

The advice that today's conference is being recorded if you require any further assistance. Please press the star et cetera.

Like to hand, the conference over at the our speaker of today, Jonathan Neely, Vice President Investor Relations. Please go ahead.

Good morning, and thank you for joining us today as we review all of the notice of this first quarter 2021 performance and our plans for the remainder of the year I'm joined today by our CEO, Peter Miller, our President and Chief operating Officer, Rami Mahmoud our Chief commercial officer.

The critical valley at our CFO, Keith got in the supply.

We presented on this call will be viewed on all of it can be viewed on our website at <unk> dot com in the Investor section before we start I would like to remind you that our discussions during this conference call will include forward looking statements. All statements that are not historical facts are hereby identified as forward looking statements.

Forward looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated by such statements. Additional information regarding these factors and forward looking statements as discussed under cautionary note on forward looking statements section of the earnings release that we issued today as well as under the risk factors section and elsewhere of Ipos as the most recent form 10-K and form 10-Q that are filed with the SEC.

I see and available on their website at SEC Gov and on our website at <unk> Dot com.

You are cautioned not to place undue reliance on forward looking statements. The forward looking statements. During this conference call speak only as of the original date of this call or any earlier date indicated in such statement and we undertake no obligation to update or revise any of these statements.

We will now make prepared remarks, and then we will move to a question and answer session with that I will now turn the call over to Peter Miller Peter.

Thanks, Jonathan and good morning, everybody.

We appreciate you joining us this morning.

Starting on slide three we'll go into more detail on a moment.

The highlight four key takeaways from today's presentation first of all.

Q1, 2021 financial performance was aligned with our company guidance. This is an important year for our company and getting off to a good start enables continued strong focus on our two core objectives driving enhanced revenue and completing the the chronic sinusitis pivotal trials, which we believe could create significant additional value for the company.

Second <unk>.

The of prescriptions of <unk> achieved another all time high in the first quarter, despite continuation of pandemic related market challenges with new prescriptions, increasing 16% over first quarter 2020.

Notably this growth as against the quarter, a year ago, which was not significantly impacted by the pandemic and in an environment, where market new prescriptions decreased 30% versus the prior year.

Third we believe there are multiple opportunities that will continue to support revenue growth in 2021.

Market environment is one factor I will discuss now and we will discuss additional factors on the next slide.

The pandemic both reduced the number of diagnostic visits by patients to physician offices and limited the ability of sales representatives to meet in person with physicians.

These market conditions have improved somewhat since the depth of of the pandemic, but are still lagging pre pandemic norms.

Looking forward as the pandemic environment eases, we expect both of our territory manager access to health care offices and patient volumes into those offices to improve throughout 2021.

We expect these two factors will provide strong support for continued growth on X hands prescriptions in 2021 in.

In addition, we believe there is opportunities to get more benefit from our partnership with <unk> as the <unk>.

Demick environment improves access for their representatives as well.

Fourth we expect to complete enrollment in our first pivotal clinical trial evaluating <unk> for the treatment of patients with chronic sinusitis in third quarter 2021, with corresponding top line results and first quarter 2022.

We are very enthusiastic about the opportunities for growth the successful chronic sinusitis trials would create X.

<unk> could be the first drug ever approved and promoted for treatment of the 30 million U S patients who suffer from chronic sinusitis we.

Turning to slide four.

Treatment of patients with chronic rhinosinusitis with nasal polyps we.

Work customized the individual patient needs, but based on the step wise logic of escalating patient care as needed from over the counter nasal sprays to X hands to surgery to enhance again after surgery and finally to biologics will support broad adoption of <unk> as the standard of appropriate medical.

Management of the disease.

It's paradigm of supported in multiple ways that we have already begun to discuss with physicians today, one of which is of published analysis of our pivotal trial data from Dr. Brent Senior Chief of Rhinology at the University of North Carolina Chapel Hill on others reporting the benefits of VIX, hence for patients who previously tried standard nasal steroid sprays.

Turning to slide six.

We had strong performance in first quarter 2021, and I will briefly touch on the year over year of growth highlights on this slide and the next.

And the first quarter of 2021, who of the were approximately 25900, new prescriptions for <unk>, a 16% increase compared to first quarter 2020, and the highest number of new quarterly prescriptions for <unk> since launch as.

As mentioned this volume growth was achieved against the market that declined 30% over the same period.

Turning to slide seven.

The <unk> market share increased from three 4% in first quarter of 2020 to five 4% in first quarter of 2021.

We're encouraged by this growth, but also excited about the headroom for future growth as more physicians incorporate X hands as a part of their customary practice.

While the <unk>, 5% of the intranasal steroid spray prescriptions written by the 18000 physicians on our target audience. There is a growing segment of believer physicians for <unk> enhance exceeds 20% of ians prescriptions written the.

The share penetration achieved in this group continues to signal the potential from growing a substantial business in the E&P analogy audience based on the current nasal polyp indication alone.

Breadth and depth of physician prescribing as measured by the total number of physicians who of patients filling <unk> prescriptions increased from first quarter 2020 to first quarter 2021 as well.

Regarding breadth in the first quarter of 2021, approximately 6920 physicians had a patient fill at least one prescription of a chance an increase of 9% compared to first quarter 2020.

During the last year increased depth drove more of our growth and increased breadth.

As business conditions improve we believe the opportunity for growth in both depth and breadth will return and we are focused promotional efforts against the subjective.

Thank you Peter.

Pardon me and thanks, everybody for joining us this morning.

As we reported <unk> recognized $12 million of total revenue in the first quarter of 2021, consisting of $11 million of expense net revenue and $1 million of of licensing revenue from of onetime milestone payment. We received under our license agreement with <unk> Pharmaceuticals.

Based on available prescription data purchased from third parties and also on data we received directly from our preferred pharmacy network.

<unk> average net revenue per prescription for the first quarter of 2021 was $151. This was favorable to our guidance of 120 to $140 per the first quarter and an increase compared to $126 in the first quarter of last year.

Moving to slide 10.

Our first quarter 2021 financial performance was in line with our prior expectations and as a result, our guidance for the full year and the remainder of 2021 is unchanged.

First we expect expense net revenue to exceed $80 million for the full year 2021.

Second with respect to expense in the net revenue per prescription we expect to see substantial improvement over the remaining three quarters of 2021.

As well as an increase in full year 2021 compared to the full year 2020 result of $185.

As discussed in our last earnings call. We had of pandemic response patient assistance program in 2020 that we do not expect to repeat in 2021, which we expect to contribute to this increase.

Finally.

For the full year of 2021, we continue to expect total operating expenses to be in the range from $137 million to $142 million.

Of which approximately $10 million is stock based compensation.

Total operating expenses, excluding stock based compensation are therefore expected to be in the range from $127 million.

The $132 million.

I will now turn the call over to Rami to discuss our development programs.

Thank you Keith turning to slide 12.

Regarding our pivotal CF trial today, we announced that we recently completed an interim analysis to assess the variance in one of the two co primary endpoints in our first trial of 30 205.

The analysis was intended to assess whether the variance assumption in our our priority of sample size calculations were consistent with the actual variance observed in the trial.

The analysis was performed on blinded interim data on approximately half the number of patients that we project to enroll ultimately in 30 205 and to assess the variance in the primary symptom endpoint.

The results of this interim analysis was of the observed variance was lower than the variance that was assumed from the estimated sample size and power during the design of the study.

As a result of determined not to make any alteration in the sample size of that trial on the basis of this interim analysis.

In the coming few months, we may elect to conduct a separate interim analysis of the other co primary endpoint, which is change in average percentage of pacified volume of RCT scan endpoint.

Which is changed from baseline to week 24.

We've continued to enroll patients throughout this period and we are encouraged by recent improvements in enrollment rates add affected centers. However, we now expect to complete enrollment in the first pivotal trial in the third quarter with top line results. Therefore in the first quarter of 2022.

We continue to expect results from the second ongoing trial in the first half of 2022.

Moving to slide 13.

Regarding <unk> 109 of our product candidate with potential utility for treatment or prevention of COVID-19, and for helping prepare for future Pandemics.

On in March we announced our plan to conduct the phase one study to evaluate the ability of opn of 109 to reduce viral burden.

In the nose with initial results available within a few weeks of the start of the trial enrollment ready.

Regulatory approval to initiate the study is still pending.

We continue to expect the result provided we get that approval within the second quarter of 2021.

As previously noted despite the excitement that we and others have for the potential value of <unk> 109, we are aware of the need to maintain a sharp organizational focus on growing <unk> and on completing of Rcs trials.

Therefore, we are actively seeking grants partnerships <unk> other sources of capital to support further development of this product without detracting from that primary focus.

I'd now like to turn the call back over to Peter for closing remarks Peter.

Thanks, Rami turning to slide 15 from.

Before moving to Q&A I'll take a moment to reiterate the we are optimistic the 2021 has the potential to bring a substantial improvement in the business environment and that this improvement buoyed by multiple other factors specific to our business and plans will continue to support strong future growth for <unk>. We are laser focused right now on two clear objectives.

<unk>.

Revenue growth for <unk> and completion of our pivotal trials in chronic sinusitis.

I look forward to providing updates on our progress throughout 2021.

And now I'd like to open the call up for Q&A.

Okay.

Thank you Sir as a reminder to ask the question given the need to press star one again of telephone.

As long as part of line. So we got a question. Please press the pound or how should.

Okay.

Our first question comes from the line of David Epsilon from Piper Sandler Your line is open.

David We can't hear you if you happen to be on mute.

Okay.

Yes.

Okay.

Operator.

Some of it absolutely on your line is open.

Let's go to the next question operator.

And our next question comes from the line of Gary Nachman from BMO capital markets. Your line is open.

Hi, guys good morning.

I apologize if you cover the subject of a kind of a different call.

Have you made any changes to the patient assistance program is that something you would consider modifying into the allergy season and it may be just comment.

How much of the cash uses allergy versus chronic sinusitis and pollo aggressive non polyp patients.

Just give us an update there.

And then just one other one.

Any modifications to the specialty pharmacy networks.

Will that continue to grow and could that potentially put pressure on the net revenue per Rx.

That's one of the factors that goes into it.

Yes.

Maybe I'll start and the <unk>.

Can add a few comments and Keith possibly as well.

Yes, Gary we did make changes to our patient assistance program at the start of the year and it frankly was less about the allergy season and more about an opportunity. We thought we had to improve average net revenue per prescription by for uncovered patients moving the first prescription so commercially.

Eligible, but not covered by an insurance plan by their insurance plan moving the payment from zero, which it was previously to $25 and that has two important those by the way are not profitable prescriptions for us and the reason we've done that is so that we can go to physicians and say we have a robust.

The program <unk>.

During the the majority of patients are going to get the product at a very affordable price.

We did a lot of work with physicians and found it moving to $25 was acceptable and we've not seen the significant impact on physician prescribing, but it does two things number one is we get $25 that we collect on those first scripts. The second is some patients don't felt at the $25 and that's actually a good thing for us because those are not profitable prescriptions on.

And that change has the possibility of that Keith referenced of contributing to improvement.

In our average net revenue per prescription versus prior years.

Specific to your question on the allergy soon so we haven't done anything Gary specifically in patient assistance to try to capture allergy volume I don't know if that was sort of behind your question.

But relative to <unk>.

Where our businesses. If you will it's reasonably unchanged from what we've talked about historically that about a third of the businesses with nasal polyp patients of.

Baton other third roughly with CF patients without polyps and then the balance with other conditions, where people have chronic inflammation of the nose.

Before we go to the specialty pharmacy question did you have anything to add.

I think that's a nice summary, Peter maybe the only thing I'll say is that the the key part of the allergy business as the when and drive patients into the office Thats the key opportunity for chronic sinusitis and ultimately nasal polyps to be diagnosed so we do see that growth.

Amplify that Gary I think you know that the week of.

The <unk> patients get exacerbations that are sort of caused by seasonal allergies and that some of that.

It obviously creates good patient flow with potential new patients that are appropriate for <unk> relative to the specialty pharmacy network, we feel really good about the network. We built we have a couple of national providers, we have some regional providers.

That contributes to the four prescriptions per patient per year that we've been able to generate.

We think it's going to be part of our business for now Gary in the specialty segment.

We don't think it's necessarily going to put any significant additional pressure on the net revenue per prescription and if anything it was Keith guided certainly this year, we expect improving average net revenue per prescription per year and as we look out.

If anything we see it reasonably.

Consistent with where we are relative to the future trends if anything may be having some favorable tailwind.

In that area.

That's great. Okay. Thanks, a lot.

And our next question comes from the line of the Georgia or data from Cowen <unk> Company. Your line is open.

Hey, guys. Thank you so much for taking my question congratulations on on the progress on <unk>.

I guess maybe first.

Hoping you could talk about those high prescribing physicians.

What's the differentiate them from the rest of your prescribed burns or do they just have high volume of practices is there anything different about what for example of their specialty.

And for those specific.

Above 15 of our.

What is the share of eggs and.

Script out of their total IMS scripts.

And we asked this on.

I'll start on Georgia, and I'll pass it to Vic maybe for a little bit of commentary.

The part of the reason I just continue to be very optimistic about this business is because what is happening in that believers segment and we have to do work to understand why people are writing and why people are not writing more I should say.

In that believer segment when you ask those doctors why are you writing they say two things number one is they say I believe in the product efficacy that it is materially different than the.

The efficacy certainly of an intranasal spray and they think it brings significant value for patients and they've seen it in their own.

Patients. The second thing is they say I find it easy to write and very affordable for patients and in fact, we do have very good market access coverage commercial coverage approaching 80% and if anything we think it has potential to improve from that point over the next six months to 12 months.

But the second thing is if they know that it's affordable and I think we've said this previously but 80% of the patients nationally will receive an enhanced prescription with no out of pocket cost and these physicians know that so we have good we have good efficacy. We know that we have good access we have good affordability or <unk>.

<unk> in the challenge, but our opportunity is a great opportunity to grow. This business is get that next group of what we call downloaders to understand that the product really does work exceptionally well in certain patients and it also is.

It has it's affordable and it is accessible.

So I don't know if you want to add anything.

Attitudinal use the.

Early adopters of these believers are in fact, just that the classic early adopter of group, but when we see an opportunity to leverage them.

To begin to influence other peers in the community that frankly, just aren't as quick in adopting new technologies I will say, Georgia two that they are everywhere.

On specific to a certain geographies or non specific to a certain prescribing type. They are in E&P, either an allergy some of them or even in primary care and literally they are all over the United States, which again gives us confidence.

Of the ability to grow the business the share by the way as we said to get into this group you have to have greater than the 20% share.

Some of these doctors by the way of a very high shares good bit higher than 20%.

Got it no. This is actually incredibly helpful. Thank you and then.

Not sure if you're willing to comment on the.

But given the improved profitability in the recovery and the pickup in prescription growth.

Do you believe that the current cash on hand.

It would be sufficient to get you to profitability to breakeven.

Keith I'll, let you take that.

As we stated in the in the Q the only guidance that we've given on cash is debt.

The the cash on hand.

Is sufficient to get US 12 months out.

We ended the year with $144 million ended the quarter of the 100 <unk>. So we feel pretty good about the cash cash position.

<unk> has always been traditionally if you look back over 19 of 20, our highest cash burn quarter. So as we continue to grow expense.

Throughout the quarter, we are of very high margin product in the mid <unk> in terms of gross profit contribution so that.

Net.

Gross profit contribution will continue to offset the.

The cash burn.

So we're excited just to focus as Peter made in his remarks on the growth of expense this year and the completion of our <unk> trials.

Thank you so much.

And our next question comes from the line of David Steinberg from Jefferies. Your line is open.

Hey, guys, it's actually Ed Chang on for Dave.

A couple of questions here.

Let's say you had talked about.

The potential.

For the.

The year.

The ability to get into physician offices to make office calls.

Can you update us on on where that is with you and also with the <unk>.

Believe you said was having.

Was not making as many of those calls.

And when the timing might come before they can.

Actually get into the office of feet of doctors.

Again, I think maybe I'll start and you can chime in with call of commentary. Thanks for the question Ed.

Great you joining us this morning.

On the.

This is an estimate ed, but we still are not in a lot of offices. Currently so again what gives us real.

Encouragement about our businesses were growing the business really pretty significantly against significant challenges of both patient volume and market new prescription volume in <unk> volume.

Rx volume being down substantially and access to office is being challenged.

And right now in many parts of the country, we are unable to access.

The 40% to 50% of doctors in any territory. So.

Our view of why is that going to change.

There's been some survey work done by <unk> on its very encouraging in some ways in our categories that in the fourth quarter on the substantial number of physicians did not want to have.

Face to face interactions with the art with with our sale of any sales representatives. That's improved substantially in the latest survey work that was done in March.

We're prepared for certain physicians still not allowing access but I think in <unk> of this year. We expect to see continued improvement I was with the physician group. The other night and take this as an N of one in one market that has two big groups by the way roughly 100 doctors across the two groups not allowing access said that in June.

Their expectation is to open up access to territory managers.

Different from anything to add there we talk about <unk> I would say that the physicians basically are telling us they see the availability of vaccines and the.

The spreading of the vaccines as of.

Opportunity for them to normalize the flow of.

Unsuitable companies back into their offices somewhat.

Also continue to invest in non personal promotion solution. So that we find and continuing to strengthen our capabilities to reach them on other channels as well so our confidence there is growing.

On <unk> you can jump in here, but <unk> has actually done a nice job across.

In the current environment, probably on the last call we were talking about for Q, but <unk> was out like many of the pharmaceutical companies Coca Cola Bottler was very typical of the majority of the pharmaceutical companies in terms of getting back out active in face to face detailing and Theyre now reasonably I think in line Vic is fair to say with the industry and they are now back out making.

The answer number of face today's calls.

<unk>.

Through the.

Ending of the first quarter into the second quarter, we really have not yet seen significant impact yet.

But again, we remain hopeful as they as access improves and they're able to get out the more physicians that they can bring real benefit.

And again to kind of anything to add on we've had great collaboration between their team on our team and we do see impact from the physicians, where they are able to make those calls.

The confidence.

Thanks for that and.

And also just on on.

On the average selling prices again.

Obviously.

If you look at last year the.

The Isps on were dampened by the.

Extension of the zero co pay with the pandemic going on.

So in the rest of this year should the pattern look.

Perhaps a little more of like what we saw in 2019.

On a sequential basis.

We think thats right Ed sorry.

Consistent thing we expect.

The guidance, we have out there is that we expect for the full year to be north of where we ended up last year. The 185.

As you noted that was impacted negatively.

Firstly by the assist program that we ran which was of pandemic response program.

That we put out there for <unk> for patients two to bridge them until they could get surgery.

With that program not being repeated this year, we would expect the cadence to be similar to 19 as you said.

And where.

We're optimistic for the average net revenue per script prospects for this year.

Thanks, Thanks, so much I appreciate the color.

And our next question comes from the line of of Brandon Folkes from Cantor Fitzgerald. Your line is open.

Hi, Thanks for taking my question.

And maybe just on the guidance can you help us think about.

Between end of <unk>.

Keeping that guidance, how much is going to be driven by growth reassessment of the net price per script.

And then staying on net price per script.

Yes.

Can you just help us.

Contextualize, maybe the inventory that was in the channel at the end of <unk> versus year end. It with the has had any impact on the net price per script during the quarter and then secondly, maybe just a clarification on the earlier question.

The cash runway extends 12 months out does that get you through.

I'll read out thank you.

All of you start on Shannon.

I can tell you Brendan with respect to our average net revenue per script.

As I said on my comments, it's the numerator in that equation is the net revenue for the period, which was driven by our gross sales.

Ex factory sales adjusted for what we expect to realize.

All of the whole gross to net sales.

Sausage, making.

No.

Absolutely if we see of Destocking in the channel, which we saw on Q1, which we always expect to see in Q1.

That does.

Adversely affect our average net revenue per prescription because you have of lower numerator.

As the as the channel Equalizes just to go back the reason that we see.

And would expect to continue to see Destocking in the first quarter of every year is <unk>.

There is a of buying both from the wholesalers now of the traditional big three as well as our <unk>.

Head of the unexpected price increase which typically comes in the beginning of the year. So we typically the cadence and I don't think this is unique to.

To up the nose, but by any stretch, but we typically see stocking occur in December and then of destocking occur over the over the first quarter.

And that negatively impacts first quarter results, but it's on a full year basis, it's 12 months and 12 months out.

Because we see the destocking on the January or in Q1 stocking in the fourth quarter. So equalizes on a full year basis, so it definitely adversely impacts.

The.

Average net revenue per script in that first quarter and it's one of the one of the factors that leads us to guiding the average net revenue per prescription.

Will be lower in the fourth quarter than it typically is in the I'm sorry on the first quarter and typically it's in the fourth quarter.

With respect to growth.

I'll start and turn it over to Peter.

But the the growth that we see this year is.

We expect to see this year I would say, it's primarily driven by prescription by by unit growth.

While we do expect to see growth in the average net revenue per prescription.

We certainly expect to see the the period over period year over year growth in.

And units meeting in <unk> for the full year.

Yes, I just would add.

As the things that we've sort of talked about previously Brandon is that we think the average net revenue per prescription is going to be more like 19 than it was in 'twenty. So we were 185 last year were closer to 200 in.

Yes.

The 185 last year, and then about 200 the year prior so the women on <unk>.

You can do the math, obviously of the potential benefit on price on the balance we do think is prescription growth.

We feel really good about growth prospects. We had we had good growth against the first quarter of last year, which was the non pandemic year.

We actually even grew new prescriptions.

Year over year on Youll recall, what happened to us in <unk> and <unk>, we had significant impact on our new prescriptions in <unk> because of no patient volume in physician offices. So when you think about a year over year impact for the balance of the year, we're going to be up against.

A very soft base from a pandemic standpoint and.

As a reminder.

70% in 'twenty versus <unk> 19 fully in the pandemic here.

The majority of the pandemic year against the base that was unaffected by the pandemic. So we feel very good about growth prospects.

And that supports our $80 million revenue for.

And Brian with respect to your question around cash the.

The guidance, we put in the <unk>.

Q isn't so much guidance, it's basically compliance with going concern.

Bases that the auditors need to provide of clean review, which they did this period. So that's the 12 months is the minimum rate. We said the same thing last period.

At the at our March call. When we report our year end results, we reported that the company had cash to meet its ongoing obligations.

<unk> with respect of debt and R&D for at least 12 months. We said the same thing this period.

<unk>.

So I would rely less on guidance than anything else. We have said that we expect I believe we said we expect the completion of.

The reporting of data for the second trial in the first half of next year.

So hopefully that answers your question.

And your next question comes from the line of Danielle <unk> from RBC capital markets Your line of Hilton.

Yes.

What's your overall level of confidence that you'll be able to deliver data within the new timelines and also was there any particular impetus to conduct the interim analysis.

Second as we look out over the rest of the year do you expect normal seasonality to come back and play a role at all on demand for its hands.

Well I mean I'll, let you take the first couple of.

Sure. So the primary reason for moving a few weeks out on the.

The expected completion of enrollment.

Has been the impact of the pandemic and as we noted earlier, it's primarily the impact in European and Canadian sites. There is a number of countries in Europe, which I'm sure you're aware.

Were particularly impacted during the.

Sort of.

Months during the earlier part of this year debt.

In ways that we Couldnt really have predicted even just a couple of months ago with the either had a prolonged effect, where the delayed vaccine uptake or other factors locally that affected the ability of trial sites to entice.

Entice patients to come in or even to be permitted to have patients coming in and that was different for different countries and it turned out that some of the centers and some of the countries, where we were particularly expecting had previously seen excellent enrollment were especially impacted so that has slowed things down a little bit but as I noted earlier in my comments, we have continued to enroll throughout this time.

<unk>.

And we just have pretty.

Pretty high confidence based on the track record so far and the number of patients that remain to be enrolled that we'll be able to complete in the window that we're currently projecting.

Interim analysis from the interim analysis I don't know fusion all of this Daniel but the the interim analysis was preplanned. So it's not something that we.

Engaged in because of some some new finding or new events that occurred in the trial. So it was of planned analysis.

To evaluate variance.

In part that's because of the assumptions, we had to make for variance.

Were based on limited prior data. So this just reinforces our comfort level that we've made the right the right assumptions about the sample size of that needed to be in the trial.

The.

It shouldn't be interpreted as something thats, a reaction to some events occurring during the conduct of the trial.

And Dan regarding the seasonality.

I think we said this on the last call but.

Relative to our ability.

As it relates to our guidance of $80 million of revenue from a market environment standpoint, we did expect there to be an impact on the TQ allergy season pandemic related we did not expect normalization. If you will in <unk> on either patient volume or.

Access to physicians.

We do think on the back half of the year debt. We expect reasonable normalization is what we are currently thinking and Thats, obviously somewhat of a crystal ball, but.

Looking at the current trends in the market environment.

And vaccination rates on all the rest.

We think that we'll get back to reasonably of normalized market in the back half of the year.

Great. That's helpful color and if I could ask one quick follow up could you just provide your latest thinking around business development and is that something you'll want to have chronic sinusitis data in hand for before pursuing in earnest.

I will say, Dan we are we're not going away from the data to begin conversations with potential partners.

We think the potential value of a primary care deployment with the CF indication is substantial and we've done significant work on primary care physicians and.

Arguably enhances it a wonderful addition of their armamentarium with the chronic sinusitis patient right now the primary care physician pretty much after a patient fails, an intranasal spray, which is what they put every patient on and in fact from chronic sinusitis, 80% of patients do not get relief in web chronic sinusitis janaka.

Get relief from the IMS, the only real option those primary care docs have today is to refer to an allergist on A&P and.

With this expert consensus that's emerging is the <unk>.

Experts in E&P, and allergy of recommending or suggesting that before going to surgery or before going to biologics that expense be considered in the paradigm, that's something that really fits directly into a primary care physician in terms of what they're doing.

So as a result, we are very.

We're very excited about the opportunity in primary care Forex hands, and we think the right way to do it is the of partnering.

As a result of that we are we're not going to wait for data to have discussions with folks.

I'm going to begin to educate them on the opportunity.

Great. Thanks again.

Thanks.

Thanks, Dan.

Yeah.

Your next question comes from the line of the David The Epsilon from Piper Sandler Your line is open.

Sure.

Hey, thanks.

So maybe I'll ask of variation of the business development question.

Slash topic.

I guess the.

Question here a couple of questions one is.

How big of a priority for you to add on that.

The other assets.

You could leverage your E&P slash allergists.

Sales presence.

So that's number one and the number two is you do have some general practitioner presents I know you talked about the partner.

Around the <unk>.

The indication, but do you think about also.

Product, where there is an adjacency into into primary care.

And then lastly, just on.

On.

Lifecycle management for <unk>.

How should we think about line extensions per product for instance on AAV.

Binding the corticosteroid with the.

On an antihistamine.

And as the last day of current sense I mean is that something that you would contemplate down the road just wanted to get your latest thought process there. Thanks.

Well I'll start and Rami and Vic on others can jump in but relative to prioritization of getting another asset in to leverage our E&P and allergy presence.

It's not an immediate priority David I mean, right now I think we're crystal clear that our priorities are on growing the <unk> business and on.

And also getting completing Rcs trials. So it's not an immediate priority, but I have said historically and I still feel this way debt.

We have to at a point in time getting get greater leverage than we have as a company that it just doesn't really make sense. Even if you are of a sizable <unk> business and the etiology segment cannot find ways to get greater leverage on the across both the headquarters of infrastructure that we built but especially the call point infrastructure because great.

Proud of our sales team, what they've accomplished and the relationships that we've developed so it's not of near term priority, but it is something that we absolutely believe and certainly in the next 12.

<unk> months.

It becomes a much higher priority.

And as a reminder, that's more than double the number of patients that are being treated in anti allergy. So the opportunity is very substantial and in that market as I described a minute ago. There arent good choices and there's really not there's really no competition for these chronic line of sinusitis patients.

<unk> from a.

Co promoting if you will so it really is a substantial opportunity and we think the right way to maximize that is true partnering or are we in primary care. Some officers today. Yes. We are we continue to expand in some primary care offices, we will.

But we think from an efficiency standpoint, the right thing to do is to find one of the folks that are in primary care and there still are several.

With significant presence there.

There was great Cross match, we know that already with the physician with companies that are already in the space relative to patients who have chronic rhinosinusitis. So we think the right way to maximize the business is through partners in primary care, having although having said that we will look to expand.

In some in some smaller instances, if you will and some adjacencies relative to lifecycle.

Rami, maybe I'll, let you talk about opportunities within the exploration delivery system device, but you know our focus there David is largely on looking at things that we can in license for the most part, but I'll, let rami sort of described.

<unk> your thoughts on lifecycle within exploration delivery, yes. Thanks for the question David So you mentioned in the last day and other things of that.

Backing up a little bit the when the time is right and as Peter said, our focus right now is on growing expense revenue and on completing the chronic sinusitis trial. When the time is right the kind of products that we'll be looking for a partner.

Which are meaningfully differentiated.

And useful to changing standard of care in the physician audience that we're currently calling on and we're going to be open minded about what kind of product that is so it could conceivably be of product and an escalation of delivery system, where other than a delivery or it could be of product that has nothing to do with nasal delivery of our treatment of diseases of the node, but which is still relevant to the physician audience for calling on but it's gone.

The need to be something which is some sort of clinically very meaningful and brings real benefit to patients from the health care system.

Okay, I think thats it.

In terms of questions operator so.

If there aren't any further questions. We will conclude the call I'd like to thank everybody for joining us. This morning, and we look forward to continued updates throughout the year.

Thank you Sir.

Ladies and gentlemen.

This concludes today's conference call. Thank you all for participating you may now disconnect.

Q1 2021 OptiNose Inc Earnings Call

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